Analyst report says final ELD rule may be issued by mid-November

In mid-September, the much anticipated final rule for electronic logging devices (ELD) was pushed back one month from September 30 to October 30, according to the Report on DOT Significant Rulemakings issued by the United States Department of Transportation.

But while October has now come and gone, the situation regarding the final ELD rule remains the same in that nothing has been issued. But according to a research note issued by Jason Seidl, transportation analyst at Cowen and Company, the ELD implementation rule may be issued by mid-November.

The research note was based on a round-table phone hosted by Cowen, featuring Paul Will, president of Celadon Group, and Noel Perry, senior analyst for freight transportation consultancy FTR.

According to the note, Celadon’s Will “indicated that his channel checks suggested a rule on the implementation of the [ELD] could be released by the Federal Motor Carrier Safety Administration (FMCSA) by mid-November, which would represent only a two-week delay.

An FMCSA official told LM that until a Final Rule is published in the Federal Register, with the matter still in Rulemaking –the Agency is prohibited from commenting.
What’s more, the note said that the rule is likely to provide the industry with two years to achieve full compliance, causing little impact on capacity in the near-term.

FTR’s Perry and Celadon’s Will noted that there is not likely to be any significant ELD-related impact until 2017, with Perry explaining that late 2017/early 2018 could serve as the “potential pinnacle of ELD-related capacity declines,” with the rule potentially causing productivity losses when fully implemented.

Perry added that the mire accurate management of drivers that is likely to be made possible by ELD should pave the way to long-term net productivity gains for the trucking industry.

“We believe the ELD implementation will be a net positive for larger carriers…as they are already largely compliant and stand to benefit from a reduction in capacity at smaller operations, which make up roughly 80% of the highly fragmented truckload industry,” wrote Cowen analyst Seidl. “Even the smaller carriers may reap net productivity gains in the long term, after initial losses, as they become better able to manage their drivers.”

According to DOT, this ruling would establish:
1- minimum performance and design standards for hours-of-service (HOS) electronic logging devices (ELDs);
2-requirements for the mandatory use of these devices by drivers currently required to prepare HOS records of duty status (RODS);
3-requirements concerning HOS supporting documents; and (4) measures to address concerns about harassment resulting from the mandatory use of ELDs

FMCSA said in March 2014 that its proposal requires interstate commercial truck and bus companies to use ELDs in their vehicles to “improve compliance with the safety rules that govern the number of hours a driver can work,” adding that “the proposed rulemaking would significantly reduce the paperwork burden associated with hours-of-service recordkeeping for interstate truck and bus drivers…and improve the quality of log book data.

Perhaps the largest takeaway of the ELD rulemaking, noted FMCSA, is that it would ultimately reduce HOS violations by making it more difficult for drivers to misrepresent their time on logbooks and avoid detection by FMCSA and law enforcement personnel. It also pointed to an analysis that said it would help reduce crashes by fatigued drivers and prevent approximately 20 fatalities and 434 injuries per year for an annual safety benefit of $394.8 million.
FMCSA Acting Administrator T.F. Scott Darling III wrote in a message issued by the FMCSA on September 15 that a final rule on ELDs is being issued by the Office of Management and Budget and is scheduled to be out later this year.

“Although we cannot discuss the provisions of a Final Rule before it is made public, I can say that the rule is designed to benefit everyone by improving hours of service (HOS) compliance, which we estimate will prevent about 20 fatalities and over 400 injuries each year; helping businesses cut paperwork and save money; protecting drivers from harassment; and making it easier for law enforcement and safety inspectors to review driver HOS records,” wrote Darling.

Many industry observers maintain that the need for ELDs is obvious, with most explaining that the industry has been reliant on paper logs for far too long.
And there could likely be economic tradeoffs through ELD usage. The mandated use of ELDs could likely reduce the effective number of miles a driver could log, further tightening trucking industry capacity at a time of limited truck driver supply, rising pay and higher overall costs for fleets.
 
“In the interest of public safety, I support these efforts as that it will reduce subpar carriers from the industry, which is a good thing,” Jeff Brady, director of transportation for Harry & David, a multi-channel specialty retailer and producer of branded premium gift-quality fruit, gourmet food products and other gifts, explained in a previous interview. “Where it is a negative however, is that it adds to further shrinkage within the industry in terms of available capacity. It also adds expense as carriers will look to recoup the costs associated with the acquiring and implementing the technology.”
 
Brady describe the proposal as a classic tradeoff—safety vs. costs—that may have unintended consequences in driver supply and productivity for fleets.
 
“This is another classic example of where the industry will be further regulated, for seemingly the right reasons,” Brady added. “But the true economic impacts of the subsequent ripple effects of the changes are not well thought out.”